TROUBADOURS, PIRATES AND THE DIGITAL POLICE:
Songwriting, publishing, production and distribution in Y2K
by Jerry Flattum

Part IV - PIRACY:

Definition
Piracy is the deliberate infringement of copyright where unauthorized duplication of an original recording is used for commercial gain. Pirated recordings often use different packaging and offer compilations or collections of artists and/or genres. Counterfeits are attempts to duplicate a recording in a way indistinguishable from the original. Bootlegs are unauthorized recordings of live or broadcast recordings, which are then duplicated and sold.

Cost to the Music Industry
Music piracy cost the music industry worldwide an estimated US$5 billion in 1997. Piracy on the Internet has become a major concern, with an estimated 80,000 illegal music files (MP3 files) available on 2,000 sites in over 30 countries. Half of these sites originate in the United States, with Sweden, the Netherlands the UK and many other Asian, Eastern European and South American countries following close behind.

A number of industry organizations are leading the way in the fight against piracy. International Federation of Phonogram Industry (IFPI) Director-General Nic Garnett says piracy is the biggest threat to the recording industry and he blames such blatant illegally obtained revenues on weak legislation and unprotected technologies all over the world. Songwriters must not leave the legal work to industry organizations and should be aware of and support industry efforts to stop piracy, improve worldwide copyright legislation and support the development of more secure encryption methods while promoting international trade.

Technological Answers
In the interests of securing copyrights, new technologies are currently being explored by the industry. This includes embedded signals or watermarks, multiple encryption, "lost" decryption keys, Internet authorization flags for licensed transmissions and even the means of auto-scanning the Net for unauthorized music transmissions.

On the legislative front, world piracy and the digital transfer of music has copyright legal reps scurrying about the world armed with a plethora of amendments to numerous copyright bills, declarations, treaties and congressional acts. All of this legal maneuvering is really about the protection of intellectual property, namely, the work of songwriters. When youre on the verge of writing the next number one hit, its hard to take the time and preview the seemingly boring subject of copyright. But when your song eventually reaches number one, and some thoughtful rec exec informs you that hundreds of thousands of copies of your single were illegally counterfeited in just one foreign land alone, you are suddenly going to realize that substantial income due you is going into the pockets of 21st century pirates.

The world of copyright is a big one, and anyone seeking the latest developments and copyright initiatives would do well to start with the United States Copyright Office. Led by such organizations as the RIAA, the IFPI, ASCAP and the NMPA/HFA with support from such companies as Intel Corp., Sony Corp., Hitachi Ltd., Matsushita Electric Industrial Co. Ltd. and Toshiba Corp., these companies and organizations have joined forces with the Copyright Office to produce an encoding standard expected to protect digitally distributed music and videos.

A number of copyright initiatives are currently in the works. There are numerous bills before Congress seeking further protection and expansion on the of the 1976 Copyright Law. The Audio Home Recording Act of 1992 already allows coded information preventing second generation copies, and provisions in the National Information Infrastructure (NII) bill have recently been submitted to Congress that will extend those provisions by laying the groundwork for copyright management systems and prohibiting equipment designed to circumvent those systems.

IFPI and BIEM
International mechanical royalty rate agreements, like the one recently signed by IFPI and BIEM will continue to impact writers and authors on an international level. The IFPI represents some 1,300 record producers in over 70 countries around the world, including the majors (BMG, EMI Music, PolyGram, Sony Music, Universal Music International and Warner Music). IFPI campaigns for the introduction, improvement and enforcement of copyright and related rights legislation and co-ordinates the music industrys anti-piracy activities. BIEM (Bureau International des socits grant les droits dEnregistrement et de reproduction Mcanique) represents 39 licensing organizations in 37 countries.

Led by the IFPI, the international music industry will continue to pressure the European Union (as well as all other regions around the world) to reduce the value added tax (called VAT) on sound recordings, ratify world trade treaties, help stop piracy in nations belonging to the EU, and add new copyright laws to protect online transmission.

Clintons Role
In October of 1998, President Clinton signed into law the Digital Millennium Copyright Act which put into effect the World Intellectual Property Organization (WIPO) treaties. WIPO initiated a compulsory licensing fee for webcasters, but still requires amendments to numerous loopholes.

RIAA
The Recording Industry Association of America (RIAA) is a trade association whose member companies create, manufacture and/or distribute over 90% of the legitimate sound recordings produced and sold in the United States. The RIAA is broadly similar to the British Phonographic Industry (BPI), the record producers trade association in the United Kingdom.

Recently, the RIAA took action against a company called AudioNet. AudioNet maintained a website called AudioNet Juke Box. Over 400 full-length albums were being unlawfully made available for downloading by anyone. A number of major record labels joined RIAA as co-plaintiffs in three separate lawsuits. The RIAA alleged that the sites violated Federal copyright laws introduced into the Copyright Act 1976 by the Digital Performances Right and Sound Recordings Act 1995.

It is estimated that at least 85% of the records released in the United States do not recover production costs. Income is generated from the remaining 15% and this income is used to develop new writers and artists. Most of the pirated titles from the Internet are taken from the 15% figure. In the United Kingdom, the band Oasis recently threatened legal action against a number of their fan sites because of unauthorized offerings of downloadable samples of the bands music.

The 1976 US Copyright Act did not recognize performance rights on sound recordings. In conjunction with the Copyright Office, the RIAA and others are calling for amendments to the Digital Performances Right Sound Recordings Act 1995 and other acts to extend performance rights to all sound recordings. This includes the use of sound recordings in the re-transmission of radio broadcasts over the Internet.

SDMI
In December, 1998, recording industry and technology leaders from around the world announced in a press release a collective initiative for establishing the Secure Digital Music Initiative (SDMI). The SDMI is a specification that will protect copyrights of music in all existing and new digital formats and all means of digital transfer and distribution. The SDMI Forum (a consortium of digital music companies) believes the initiative will allow consumers easy access to recordings, increase copyright protection and promote better communication and business between the technology and music industries.

The SDMI Forum consists of a virtual whos who in the music business: Strauss Zelnick, president and CEO of BMG Entertainment; Ken Berry, president of EMI Recorded Music; Thomas D. Mottola, chairman and CEO of Sony Music Entertainment; Doug Morris, chairman and CEO of Universal Music Group; Bob Daly, chairman and co-CEO, Warner Bros. and Warner Music Group; Terry Semel, chairman and co-CEO of Warner Bros. and Warner Music Group; Hilary Rosen, president and CEO of the Recording Industry Association of America; and Jason Berman, chairman-elect and chief executive of the International Federation of the Phonographic Industry. Berman also represented the Recording Industry Association of Japan. Many independent labels are behind the initiative as well.

The biggest names in hi-tech are also involved: AOL, AT&T, IBM, Lucent, Matsushita, Microsoft, RealNetworks, Sony Corporation and Toshiba, Aris Technologies, Diamond Multimedia, Headspace, Iomega, Liquid Audio, Samsung and Texas Instruments, and many other smaller companies.

NMPA/HFA and ICC
Spearheaded by Edward P. Murphy, Chairman of the International Copyright Coalition (ICC) and head of the National Music Publishers Association/Harry Fox Agency (NMPA/HFA), a resolution was unanimously adopted at a recent MIDEM annual meeting by delegates from numerous organizations representing the most significant copyright markets from around the world. The resolution calls for international compliance with the World Intellectual Property Organization Copyright Treaty (WIPO). The ICC is a coalition of creators, copyright holders and organizations whose purposes include support for protection of copyright in the digital age, and the encouragement of the use of licensed music in all digital media.

HFA and AOL
The Harry Fox Agency, Inc. (HFA), The licensing arm of NMPA, and America Online Inc. entered into a licensing agreement in 1998. HFA entered into the agreement as licensing agent for its publisher principals. The agreement allows certain uses of musical compositions created by AOL members in musical instrument digital interface ("MIDI") format, including the uploading and downloading of songs to and from AOL forum libraries.

AOL
America Online Inc., based in Dulles, Virginia, is the worlds leader in branded interactive services and content. AOL operates two worldwide Internet online services: AOL, with more than 11 million members; and CompuServe, with more than 2 million members. AOL also operates AOL Studios, the worlds leading creator of original interactive content. AOL.com is the worlds most accessed Web site from home. AOL Instant Messenger allows instant communication with all Internet users. AOL NetFind is a comprehensive guide to the Internet.

NMPA/HFA INTERNATIONAL
The Harry Fox Agency, Inc. (HFA) is a wholly owned subsidiary of the National Music Publishers Association, Inc. (NMPA), the principal trade association representing an estimated 18,000 music publishers in the United States. HFA issues mechanical recording licenses and handles other licensing activities. Established in 1927, HFA also serves as an information source, clearinghouse and monitoring service for a large percentage of music used in the United States and around the world. HFAI is a special purpose subsidiary of The Harry Fox Agency, Inc., established in 1993. NMPA supports and initiates worldwide compliance with WIPO treaties, copyright term extension, setting statutory mechanical royalty rates, lobbying for intellectual property rights and against piracy in the digital age.

ISWC
Introduced by a consortium of composers, publishers and copyright societies in 1995, the ISWC (International Standard Work Code) is a worldwide method of identifying musical compositions (songs, symphonies, jingles, TV theme songs, etc.).

Other Standard Numbers
There are several standard numbers already in use worldwide. The EAN/UPC (European Article Number/Universal Product Code) appears as a barcode on CDs, cassettes, and videos. The ISRC (International Standard Recording Code) identifies individual sound recordings which make up the different tracks on each CD or cassette. The ISMN (International Standard Music Number) identifies editions of printed music. The CAE (Compositeur, Auteur, Editeur) identifies the creators and publishers of music.

Description of ISWC
The ISWC is different from other codes because it identifies the musical composition itself, not the composer, sound recording, or the printed music. A song might be recorded several times, and each recording has its own ISRC, but the song itself has only one ISWC.

A composition with a ISWC can be identified, protected, administered, and exploited in a much more efficient way than ever before. This will bring many practical benefits to composers, authors, publishers, users, and their societies around the world. The ISWC also reduces errors and administrative costs of many organizations, simplifies registration, licensing, tracking, and distribution of royalties. There are some one billion possible ISWCs. Unused numbers are held in a "bank" by the International ISWC Agency.

ASCAP/BMI
Started in 1914, the American Society of Composers, Authors and Publishers (ASCAP) claims to be the worlds largest music performing-rights and royalty collection organization. ASCAP represents over 68,000 composers, lyricists and music publishers. Broadcast Music, Inc. (BMI) was founded in 1940 representing artists and writers from "hillbilly" and "race" music, now known as country and R&B and the roots of rock & roll. It claims a membership of more than 200,000 writers and publishers with a database of 3,000,000,000 copyrighted works. Just exactly which of the two organizations is the largest remains debatable--both organizations figures range widely over the years. There are other performing rights organizations worldwide.

ASCAP and Online Monitoring Services, the leader in intellectual property monitoring for the Internet, recently announced a joint partnership offering a software technology called EZ-SeekerTM. This software is designed to license and track music performances on the Internet. BMI recently announced MusicBot which use proprietary Web scanning technology to ferret out illegal audio-visual distribution sites. EZ-SeekerTM also has the ability to decode various watermarks that may be employed by record labels, music producers and distributors to identify their works.

In 1998, ASCAP formed an alliance with Liquid Audio, a top developer of on-line music-delivery systems. ASCAP also signed a licensing deal with Minneapolis-based Net Radio Corp., and its co-venture partner, AudioNet, of Dallas. Both Web services use RealAudio technology to bring audio content to the Web. Net Radio offers mainly music, while AudioNet offers talk and sports. Net Radio is the first company to offer live music 24 hours a day on the Internet.

Other initiatives
Special 301 of the US trade law, TRIPS under the GATT agreement, WIPO, ISRC and other initiatives are briefly reviewed below.

Special 301
Under United States trade law, Special 301 is one such means of filtering out nations that fail to cooperate with international copyright agreements and treaties. This instrument may subject various countries to investigations and possibly even sanctions.

Trade Related Intellectual Property Agreements (TRIPS)
Under the GATT agreement, TRIPS are another tool providing further protection and enforcement of copyright. This compliance program has already closed certain loopholes that allowed countries like Luxembourg, San Marino, Australia and Italy to hide bigtime bootleggers. The piracy of back-catalog recordings in Japan is also a major focus as well as legal reforms in heavily pirated countries like Ireland and Korea.

Copyright Industries and Trade
The core copyright industries (including recorded music, film and TV) contributed $60.18 billion in foreign sales and exports to the United States balance of trade. This figure surpasses even such mainstay export sectors as the automotive, agriculture and aircraft areas.

World Intellectual Property Organization (WIPO)
The European Unions 1997 release of their Copyright Directive still fails to meet the standards of the WIPO treaties. Numerous other countries are still undergoing ratification of the WIPO treaties and this will continue well into Y2K.

International Standard Recording Code
Under the administration of the RIAA, the International Standard Recording Code (ISRC) is currently being developed as a means for identifying sound and music video recordings. Each sound recording will have its own unique number, identifiable no matter how or where the recording is transferred via digital means. The ISRC will co-exist with the UPC system. Remixes, edits, new versions of tracks, tracks with changed playing times, partially used tracks, and fully re-mastered tracks (tracks with fully restored sound qualities) will all be coded. In addition, many CD manufacturing plants stamp their products with a SID code unique to every individual CD plant mold used to manufacture CDs. CD-R recording devices are also under close scrutiny. How all these codes will interface remains to be seen, but its certain that serious efforts are being made to stop the pirates of the new millennium (sounds like a movie title).

Copyright Management Systems
Other developing copyright management system technologies include embedded signaling, encryption and IEEE 1394.

Embedded Signaling
Embedded signaling systems, or watermarks, are buried in audio and not heard by the listener. This system can identify the music and control and regulate unauthorized copying and transmissions of recordings. The embedded signal cannot be removed even if the digital recording is converted to analog, compressed or broadcasted. Encryption "keys" and other data are also buried in the signal so consumer electronic devices, computers and network equipment can automatically detect authorized use.

Encryption
Encryption is a method designed to protect movies and music by scrambling content that can only be descrambled with the right software. Encryption technology will have no effect on television sets, PCS, set-top boxes, digital VCRs and digital video disk (DVD) players.

IEEE 1394
IEEE 1394 is a new proposal that protects transmissions by setting a standard for digital devices to talk to other digital devices. A number of proposals to protect content in the course of transmissions are presently being evaluated.

Cryptolope
IBM has developed a device allowing for secure electronic distribution called the Cryptolope. Cryptolope stands for "encrypted envelope," a phrase describing the Cryptolopes operation. The user receives an envelope containing data, but the data is encrypted. Without an encryption key, only a description of the content is available.

Intelligent Agents
Intelligent Agents are a new way for publishers to reach targeted groups of customers. Intelligent agents are used to build large mailing lists while allowing for organization by musical interest. One new product is called Firefly. Firefly uses artificial intelligence to project what a user will like based on what the user currently likes. Firefly allows for a online, interactive catalogue. The idea of the intelligent agent is already in use at two major commercial sites on the Web. The bookseller Amazon (www.amazon.com) offers a list of four or five other books that readers might wish to purchase in addition to the one being selected. Barnes & Noble (www.barnesandnoble.com) have allegedly implemented the Firefly system.

Liquid Audio
Liquid Audio uses sophisticated multi-layer encryption and state-of-the-art water marking technology that binds downloaded music to an individual consumer and identifies the copyright owner of the musical content. The rights of content owners are further protected through the inclusion on all tracks of an inaudible digital watermark which contains ISRC codes, copyright information and other user defined data. Liquid Audio provides complete performance reports for the performing rights societies including song title, artist name, duration, the number of times streaming was initiated, the total streaming time for the song and the average streaming time for each listen.

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